Cheaper Retailers Score Big
Jennifer Marks -- Home Textiles Today, July 14, 2008
Are Americans becoming Swedes? I ask because last year a Portuguese manufacturer who exports all over the world summed up the Swedish market thus: "They like it colorful and cheap."
U.S. consumers may not have as great an appetite for noisy color as the Swedes, but they are certainly surging toward the cheap. No surprise — the lousy economy is giving a boost to many discounters and off-pricers.
Just look at the June retail sales results. Family Dollar and Ross Stores comps up 8%. Fred's up 6.5%. Walmart U.S. stores up 6.1%. TJX up 5.0%.
It's an fine moment for warehouse clubs, too: BJ's comps up 16.5%; Costco and Sam's up 9%.
Now peruse HTT's Top 50 Retailing Giants report in this issue. Everybody notices the top 10, but take a look at the second 10, retailers Nos. 11-20:
Big Lots, Family Dollar, Sears, Ikea, Ross, Anna's Linens, Luxury Linens, Tuesday Morning, HomeGoods, and Lowe's. Most of this group stakes their position on a sharp value strategy. Several focus on lower-income consumers, which unfortunately is in ever more need of relief.
If the economy is pressing even middle-income consumers to shop like Swedes, one has to wonder what next year's Top 50 is going to look like. Consider this: In the overall rankings for 2007, roughly half the retailers posted declines in home textiles sales — and that in a year that was mostly OK economically and didn't start fizzling until the fall.
The home category is certainly under stress this year, and most industry execs I've spoken with continue to believe the category will be hurting well into 2009. So next year's Top 50 is likely to show even more decliners. It's tough to grab a bigger piece of the pie when the pie itself is barely growing.
Back-to-school season is on the way. Some analysts predict heavy shopping (and more promotional pricing) on the must-have stuff — notebooks, etc. — and lighter shopping on the apparel and dorm décor, which alone rang up $47 billion in sales last year.
The early read on 4Q orders indicates retailers will continue to keep a tight rein on inventories. The best-case scenario would probably be to match Holiday 2007's paltry 4% year-over-year sales gain.
On the bright side, even a slack economy can't last forever. Once things start looking up, there's going to be a lot of pent-up consumer demand to be fed. Today's Family Dollar shopper will start splurging at Walmart again, the Walmart shopper at Target and the Target shopper at Pottery Barn.
As the Swedes say: Andra tider andra seder. Other times, other customs.
Related Content By Author
Industry Related Content
H&TTtv Talks Outdoor Rugs